Biden’s Fed nominees quizzed on inflation, climate issues at confirmation hearing
WASHINGTON — Three of President Biden’s Federal Reserve nominees testified before lawmakers Thursday morning, where they were asked about inflation, climate change and the Fed’s handling of the broader economy.
Sarah Bloom Raskin, Lisa Cook and Philip Jefferson jointly appeared before the Senate Banking Committee, which votes on Fed nominees before the full Senate weighs in. Last month, Biden nominated Raskin as the Fed’s top bank cop and Cook and Jefferson to fill seats on the board of governors with seven Fed members.
“These three experienced public servants understand the importance of empowering workers through full employment and the need to fight inflation so paychecks go further,” Senator Sherrod Brown, Democrat of the United States, said Thursday. Ohio and Chairman of the Senate Banking Committee.
It looks like Raskin, Cook and Jefferson will receive enough votes to be confirmed, creating the most diverse Fed board in the central bank’s 108-year history. Cook, an economist at Michigan State University, would be the first black woman on the Fed’s board. Jefferson, an economist at Davidson College, would be the fourth black man appointed to the board.
Still, many Republicans have spoken out strongly against Raskin and Cook for their longstanding focus on climate change and racial inequality in the economy, respectively.
Cook is a renowned economist whose work has focused on macroeconomics, economic history, international finance, and innovation, particularly on how hate-related violence has reduced US economic growth. She worked on the White House Council of Economic Advisers during the Obama administration and was a guest at the National Bureau of Economic Research, the University of Michigan, and the Federal Reserve Banks of New York, Chicago, Minneapolis and Philadelphia. Cook holds a Ph.D. in economics from the University of California, Berkeley.
“Everyday Americans are hurting,” Cook said Thursday. ”I am motivated by seeing the suffering of workers, companies, just trying to plan their daily lives in the face of an inflationary environment.”
Yet Cook has come under attack from Republicans who say she is “fundamentally unqualified.” Many conservatives have dismissed Cook’s academic and professional credentials as unrelated to the work of setting monetary policy, while portraying her as a radical racial justice activist – rather than an economist. (Fed Chairman Jerome Powell, by comparison, does not have a doctorate in economics.)
During Thursday’s hearing, Sen. Bill Hagerty, Republican of Tennessee, asked Cook about his credentials and their relevance to Fed policymaking. Cook said she knew she had “been the target of anonymous and false attacks on my academic record.” As she began to detail her experience — including her work through several financial crises working with Treasury Department and White House officials — Hagerty cut her off.
Raskin was Assistant Secretary of the Treasury Department to President Obama from 2014 to 2017 and Governor of the Fed Board from 2010 to 2014. Her recent work in academia has also focused on climate risk, and she has called on regulators to consider how they can address climate change in their work.
Senator Pat Toomey of Pennsylvania, the top Republican on the Senate Banking Committee, has long argued that climate change is not the purview of the central bank but should instead be dealt with by elected lawmakers. Toomey warns the Fed against “mission drift” beyond its defined mandate around stable prices, full employment and surveillance of the banking system.
”Mrs. Raskin’s proposals would have devastating consequences not only for energy workers, but also for consumers, who would pay far more for energy. On what basis could she justify this idea that the Fed wields these extraordinary powers? Toomey said during Thursday’s hearing.
Raskin, responding to questions, described his approach to Fed regulation and supervision of banks. Raskin said banks choose their borrowers — not the Fed — and it would be inappropriate for the Fed to make credit decisions and allocations. Raskin also said any action by the Fed should be within its defined mandate, instead of encroaching on territory intended for elected lawmakers.
Many Democrats and economists also note that Raskin’s general remarks on climate change are not out of step with what Fed leaders, including Powell, are already arguing. The Fed has been slower than its international peers to integrate climate issues into their regulatory framework, including through exercises that can help banks gauge their exposure to climate risk. Raskin’s supporters hope she will add specificity and urgency to the work the Fed has already undertaken.
”I understand the role. I understand the law,” Raskin said Thursday.